by Josh Funk, AP Business Writer
Deere & Co. said Wednesday that its second-quarter profit jumped 16 percent as sales of farm and construction equipment improved, so the maker of iconic green and yellow machinery raised its outlook for the second time this year.
The Moline, Ill.-based company said it generated $547.5 million in net income, or $1.28 per share, in the quarter that ended April 30. That's up from net income of $472.3 million, or $1.11 per share, a year earlier. Excluding a charge related to health care legislation, profit was $1.58 per share.
Deere's revenue grew 6 percent to $7.13 billion, from $6.75 billion, in the same period last year. Part of that increase came from price increases and favorable currency exchange rates, but sales of large tractors and combines have improved and construction equipment sales are starting to rebound from historic lows as the economy recovers.
The results topped analysts expectations of net income of $1.09 per share on $6.6 billion revenue.
Deere stock jumped $1.66, or 2.9 percent, to $58.82.
Deere increased its annual outlook. The company now expects total sales to grow 11 percent to 13 percent and net income to reach $1.6 billion. Last fall, Deere officials predicted a $900 million profit for fiscal 2010, and in March, the company predicted a $1.3 billion annual profit.
"John Deere is exceptionally well-positioned to help meet the world's increasing need for farm commodities and other renewable resources as well as for shelter and infrastructure," Deere's Chairman and CEO Samuel Allen said.
Jefferies & Co. analyst Stephen Volkmann said in a research note that Deere solidly beat Wall Street expectations because of the strong performance of its agriculture equipment division and continued efforts to control costs.
Deere is predicting that agriculture equipment sales this year will soar 25 percent in South America because of strength in Brazil and Argentina. Sales in the United States and Canada are expected to grow 5-to-10 percent in 2010.
The company said those increases will offset weakness in western Europe where agriculture equipment sales are expected to fall 10-to-15 percent in 2010.
Deere said it expects its sales of construction equipment to jump 30 percent worldwide in 2010.
Deere, the world's largest manufacturer of agricultural equipment, also makes construction and forestry equipment, such as backhoes, excavators, riding mowers and leaf blowers.